Don’t Listen to Tabloids for Divorce Advice

Celebrity gossip outlets have already dedicated a significant amount of time and resources to the divorce of Bethenny Frankel and Jason Hoppy, a couple who gained national renown through their appearance on the ‘Real Housewives of New York.’ The man, who is a pharmaceutical representative, filed for divorce earlier in 2013, but the couple is reportedly still living together in their $5 million apartment. The situation has led to not only questions about child custody, but also an increasingly tense property division situation.

One of the more difficult questions during any divorce relates to the ownership of the family home. Homes are generally one of the most significant assets in a marriage, making property division issues even more sensitive. The case of Frankel and Hoppy raises additional questions about exactly who should be allowed to remain in the marital home after a breakup. In this particular case, neither of the members of the couple will move out of the apartment because they think that action could be construed as abandonment under law in the state of New York. They believe the person who leaves could face an uphill fight in retaining rights to the property after the divorce. That law changed to reflect no-fault divorce protocol such as that currently present in Maryland.

Legal information from experts shows that statement to be patently false. No matter if one person moves out of the marital home, it is still considered an asset that was acquired during their marriage. That makes it fair game for negotiation during a divorce. The value of the property would be divided during the breakup, regardless of who actually lives there.

If you are concerned about the future of your marital home, you do not have to take drastic steps such as continuing to live with your soon-to-be ex-spouse. Instead, consult a qualified family attorney to help you learn more about your financial and legal rights. Property division questions, especially those pertaining to the family home, are sensitive and should be handled by an experienced professional.

Source:  www.forbes.com, “Should you move out of the marital home? Learn from divorce attorneys, not the tabloids” Jeff Landers, Jun. 11, 2013

Protect Your Assets Without a Prenup

Many couples choose to protect their assets before divorce through the use of prenuptial agreements, but such property division strategies are not always feasible. Considering that about half of Americans split up within the first eight years of marriage, an alternative to the prenuptial agreement would be useful. Experts say latecomers to property division should consider shielding their assets from the marital estate through the use of divorce trusts.

A financial shield known as a self-settled trust can help you protect assets for your sole benefit, effectively removing them from your spouse’s access. Ideally, you should set up these trust documents before you have any creditors. These include your spouse, or perhaps your soon-to-be ex-spouse. You do not have to tell your spouse about this trust if you establish it 31 days before marriage in some states. Other states also allow you to set up this type of specialized trust even after your marriage is formalized.

Experts in divorce and financial law urge caution when using these trusts, however. Do not put all of your money eggs in one basket. The trust should be seen as a safety net in the event of a divorce, not your primary source of income. If you put too much in the trust, your ex could successfully argue that you are trying to hide marital property.

Another trust option is known as the Delaware statutory trust. This type of trust is commonly used by entrepreneurs in lieu of establishing limited liability companies. If the trust becomes part of the marital estate, it would be an unattractive asset because of the tax structure. An ex-spouse could attempt to obtain the trust during the divorce, but that person would then have to bear the entire income tax burden, even if there is no distribution from the account.

So, even if you have not set up prenuptial documents, you could still protect your assets from the possibility of divorce. Consider consulting your financial planner and family attorney to learn more about your legal options and rights.

Source:  online.barrons.com, “Divorce trusts” Tatiana Serafin, May. 18, 2013

Wevorce Revolutionizes Divorce Proceedings

About half of all American marriages end in divorce. Last year, Maryland residents and others nationwide contributed to the 800,000 married couples who filed for the legal separation, confirming the fact that nearly half of the 2 million Americans who marry each year are headed to the courtroom. While some of these breakups are adversarial, an increasing number of couples are looking to complete their property division and child custody decisions in a collaborative fashion. New technology is actually allowing couples to perform most of their divorce processes online, working together to craft their divorce agreement out of court.

This innovative program, known as Wevorce, aims to minimize the stress and discomfort of divorce by making the process faster, simpler and less expensive. The program’s creators emphasize that family members go through divorce together, so a cleaner break is often more beneficial.

The computer-based service provides a complete divorce package for about 30 percent of the two-attorney litigation process. The six-step process includes planning for the divorce, co-parenting strategies, parenting agreements, financial planning and finalizing the divorce settlement.

Wevorce has a simple and revolutionary structure. It requires couples to meet with a mediator together for an initial consultation rather than bringing ideas to the table with their individual attorneys. The legal system should be a collaborative process, according to the program’s creators, rather than a fight for property rights and other benefits.

Although the program is still small, the client base appears to be growing as the technology becomes more popular. Attorneys are given more time to work face-to-face with their clients because paperwork becomes more automated and easier. Wevorce can also help families navigate the divorce process over a distance, making it one of the most versatile tools in the divorce world today.

Couples seeking easier approaches to the divorce process could consider alternative methods like collaborative law and technological tools. Consult with a collaborative law professional to find out more about your legal options.

Source: forbes.com, “Can this Y-Combinator startup’s technology keep couples out of divorce court?” Jeff Landers, April 10, 2013

Does Your Prenuptial Need an Infidelity Clause?

Infidelity clauses in prenuptial agreements have been in the news lately, largely because of the relationship woes experienced by Tiger Woods and his ex-wife, Elin Nordegren. Can property division after divorce be facilitated through infidelity clauses in prenuptials? Experts say that most couples should avoid such stipulations in their premarital agreements, but some pairs could benefit from an infidelity clause.

Infidelity clauses are primarily useful for those whose prospective spouse has a history of extramarital affairs or other cheating. These stipulations provide additional financial relief for the spouse who is victimized by the affair. Most infidelity clauses are requested by the female partner who suspects her soon-to-be husband may have stepped out of a relationship before.

Attorneys give several examples of instances in which infidelity clauses are inappropriate. One woman wanted to include a provision that would have awarded her ownership of the man’s restaurant if she determined that he had cheated. Another sought to have potential alimony doubled in case infidelity was proven. Both of these women ultimately agreed to strike the provisions from the prenuptial agreement because there was no indication that either man would cheat; both men’s past was ostensibly clean.

If you do decide to pursue an infidelity clause in your prenuptial agreement, you should address several specific concerns. First, you and your prospective spouse need to create precise definitions for infidelity. While some people may define infidelity as going to a strip club, others consider anything less than sexual intercourse acceptable. The agreement must include clear guidelines for determining whether a spouse has cheated. Furthermore, both parties must agree on measures that can be used to determine whether a spouse has been unfaithful. The nature and amount of proof required to establish a spouse’s infidelity must be detailed in the prenuptial.

Remember that prenuptial agreements are contractually binding. People who enter into the agreements are rarely excused from them, so the agreements must include all necessary provisions when they are drafted.

Source: Huffington Post, “Infidelity clauses: Protecting marriage with fear of financial fall-out,” Barry Finkel, March 26, 2013.

World’s Most Expensive Divorce Pending

In one of the most expensive property division cases ever recorded, one billionaire’s soon-to-be ex-wife is slated to receive about $5 billion in their divorce settlement. The information was revealed recently by Reuters reporters conducting an in-depth look into the breakup between oil mogul Harold Hamm and his second wife; unlucky for him, she is both an attorney and an economist.

The woman, Sue Ann Hamm, is Harold’s second wife. Since she filed for divorce last year, the woman has been alleging that Harold cheated on her. In the absence of a prenuptial agreement — or if the agreement is voided because of infidelity — Sue Ann stands to nab a majority share in Continental oil, the company Harold founded in 1967. In other words, the self-made billionaire could lose about 68 percent of the company to his ex. With the woman’s projected shares in the company adding up to more than $5.3 billion, the divorce settlement would easily be the most expensive on record, even among the super wealthy.

It is still not entirely clear whether the woman will actually end up with an even half of the man’s financial holdings; after all the pair has two children, a factor that could substantially increase the price of the divorce if Sue Ann gets primary custody and child support. The courts will also factor in the 25-year span of the marriage, along with Sue Ann’s time spent as an executive at Continental, where she was responsible for marketing units and other key activities.

The record-breaking potential settlement dwarfs even Rupert Murdoch’s recent divorce, which cost him about $1.7 billion in 1999. Financial magazines have had difficulty proving that Murdoch in fact paid that much, though, considering the quality of his legal representation.

Property division is largely dependent on the presence of a prenuptial agreement. High-asset couples who are pursuing divorce should first consult their prenuptial requirements before seeking other legal alternatives.

Source: Forbes, “Oil billionaire Harold Hamm’s divorce could be world’s most expensive at over $5 billion,” Clare O’Connor, March 23, 2013

Know The Value of Your Home Before You Divorce

Many Maryland couples find themselves arguing over who will keep the family home when they divorce. As such, it is important that couples truly understand the value of the property they are attempting to divide. Rather than simply guessing about the value of your home, experts provide a variety of options that can help during property division negotiations.

The most accurate way to determine the value of your home is to spring for a full home appraisal. Professional appraisers are able to estimate the home’s value by factoring in special features of the home, as well as the value of nearby establishments and other investments. Appraisers tend to be more expensive, however, with fees for some professionals costing several hundred dollars. Divorce attorneys say that money is generally well-spent, though, because it can save financial trouble in the future.

A home that is not correctly valued could cost one of the partners a significant amount of money; if the home is undervalued, the person who keeps the home will not receive a fair payment for the property’s equity. If the house is overvalued, then the person paying for the equity will be financially compromised.

If you choose not to enlist the services of a home appraiser, you can consult a real estate agent to obtain a comparative market analysis. This is a quicker and less expensive method, though it tends to be less accurate. Your real estate agent will estimate the value of your home based on the sale prices of other similar homes in the same area. Again, this method does not take the condition of your home into account.

Finally, you can agree to do your own research in order to determine your home’s value. This is generally not encouraged unless both partners agree to the independent research option.

The value of your home is important information to have during your property division proceedings. Be sure that you are adequately informed so you can protect your financial health during the divorce.

Source: Huffington Post, “Three ways to value your home in a divorce,” Joseph E. Cordell, March 1, 2013.

Keep Your Nest Egg Safe Through Divorce

Women are generally the financial victims in divorce. They tend to lose as much as 41 percent of their income after the property division is complete. In comparison, men only experience a 25 percent drop. Women should be better prepared to negotiate for their financial futures during divorce, so experts are now releasing strategies that can promote financial success for female divorcees in Maryland and elsewhere.

Even though divorce and family changes put a significant amount of worries on your plate, you should remain focused on keeping beneficial assets and seeking fair property division. Experts say that women often settle for undervalued holdings that will do little to help them in the long-term. 

Instead of looking to secure the family home, for example, push to get a percentage of the retirement funds you have both been establishing. Houses require capital to repair and maintain, while most retirement funds are relatively inexpensive. That illiquid asset could weigh down a woman’s financial future while taking away her safety net.

Take care of your portfolio choices by converting pensions and 401(k) funds to IRAs. This generally gives you better investment options. Remember that you can still wisely invest even without your spouse’s help. 

If your husband has been managing the investments, you may feel as though you are experiencing a steep learning curve. Never fear, because investment professionals are available to help. Consider investing in a fixed-date fund that would allow you to consider other investments while still earning.

Finally, if you decide to remarry, you need to draft a prenuptial agreement to protect your assets for your own children. Prenups tend to be more common in second marriages for just this reason. Even though you may be preparing for your children’s financial needs, you can still work together as a couple to benefit the family.

Experts also advise that recent divorcees take time to evaluate their investments. Do not rush into any investment or asset management plan. Instead, take several months to deal with the emotional and financial impact of the loss before you decide how to manage your money.

Source: CNN Money, “Rebuild your nest egg after divorce,” Beth Braverman, Feb. 21, 2013

Prenups Do Not Spell Doom For Marriage

Couples who are heading for their impending wedding may find prenuptial agreements remarkably unromantic; after all, who wants to plan for the demise of their marriage before it has even started? Still, with the modern divorce rate continuing to skyrocket, couples would be wise to put their property division wishes in writing before a breakup occurs. Prenuptial agreements allow individuals who separate because of death or divorce to remain economically secure.

Prenuptials are increasingly popular among newlyweds because Americans are waiting until later in life to tie the knot. As a result, they have significantly more assets to protect. Most individual property will be held as communal property during a divorce, according to experts, because state laws offer little protection.

Think of a prenuptial agreement as a form of divorce insurance. Newly engaged couples often meet with a lawyer or financial planner at the same time they start their wedding plans. This practice allows the couple to avoid hefty legal fees later in life if they do choose to break up. Even though prenups may be seen as a luxury only afforded to wealthy Americans, everyone can benefit from drafting such a document. Experts say the emotional and social cost of litigation can far eclipse the financial investment in a prenup at the beginning of a marriage. If you are not wealthy, you can still benefit from a prenup. You may own items that have sentimental value, for example, or your retirement accounts could add up to $10,000 or more.

Some couples also draft postnuptial agreements if they reconcile after considering divorce. These documents provide the same protection as a prenuptial agreement, but they allow the couple to decide their property division strategy in advance if the reconciliation fails.

Remember that signing a prenup does not doom your marriage to failure. To make the process smoother, ensure that both people have their own lawyers present. Prenups take about three months to finalize, so give yourselves plenty of time to negotiate.

Source: Fox Business, “Why you should consider a prenup,” Andrea Murad, Feb. 4, 2013.

Don’t Underestimate the Value of a Good Real Estate Appraiser

One of the most common questions divorcing couples face is whether they intend to keep their family home. Although a one-word answer would be luxurious for conversation about the matter, the reality is that few couples are able to quickly make decisions about such complicated property division issues. Couples must consider whether one person should remain in the family home or the property should be sold to divide the profits. When vacation homes and other properties are thrown into the mix, an even more convoluted situation can result.

Real estate appraisal is one of the key elements that will help you decide whether to keep or sell your home. Most real estate appraisers will assess the value of your property using the value of comparable homes in the same market with similar features. Those comparable sales, along with the value of any special features, are added together to determine the value of a home. Most residential properties are consistently assessed, but special features such as docks, greenhouses and large garages may complicate the process. Judges may order an independent appraisal if both sides cannot agree about the value of a property.

Keep in mind that many of your additions may be viewed as liabilities in your local housing markets. Add-ons such as swimming pools may actually lower the value of your home, depending on the real estate climate in your area. The appraiser is not biased toward your preferences, instead considering the needs of buyers in the region.

Also remember to choose an appraiser that is familiar with the local real-estate market. Fair market values differ significantly between areas, even within the same state. As a result, divorcing couples should seek the services of a local appraiser, especially for out-of-state vacation homes.

Finally, remember that real estate values are not stable over time. A retroactive appraisal of a home might be necessary, particularly for women who moved into homes that their husbands already owned. If you can prove that your marital funds increased the value of the home, you can ask for a higher cut when the time comes to divide property. Negotiating a fair divorce settlement is difficult, but an accurate appraiser can play a critical role in helping you get the money you deserve.

Source: Forbes, “Seven key points divorcing women need to know about real estate and real estate appraisals,” Jeff Landers, Jan. 22, 2013